Exam 15: Cost Allocation: Joint Products and Byproducts

Use the information below to answer the following question(s): Orange Paper Company processes wood pulp into two products.During February the joint costs of processing were $156,000.Production and sales value information for the month were as follows: Paper sells for $2.85 a kilogram and cardboard sells for $3.90 a kilogram. There were no beginning inventories for April but ending inventories totalled 15,000 kilograms for paper and 18,000 kilograms for cardboard. -How much of the Orange Paper Company joint costs should be allocated to the cardboard using the net realizable value method based on total production?

Use the information below to answer the following question(s). Chem Manufacturing Company processes direct materials up to the splitoff point,where two products (X and Y)are obtained and sold.The following information was collected for the month of November. Direct materials processed: 10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage) The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000. The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November. -What is product Y's approximate joint production cost if the sales value at splitoff point method is used?

Trundle Ltd.produces two main products,J and K;and,a byproduct,L.There were no beginning inventories.During April,it incurred $275,000 of joint costs,which are allocated to main products using the physical output method.Additional information follows: Required: Assuming Trundle recognizes byproduct revenue at the time of sale,what is the total value of ending inventory?

Use the information below to answer the following question(s). Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the splitoff point,where two products (paper and pencil casings)are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of October. Trees processed: 50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap) Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500. Raynor Manufacturing's accounting department reported no beginning inventories;however,ending inventory amounts reflected 1,000 sheets of paper in stock. -What are the pencil casings' sales value at the split-off point?

What are the four methods of allocating joint costs to individual products? Which of these methods is preferred,and what are two advantages of this method?

Use the information below to answer the following question(s). Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the splitoff point,where two products (paper and pencil casings)are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of October. Trees processed: 50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap) Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500. Raynor Manufacturing's accounting department reported no beginning inventories;however,ending inventory amounts reflected 1,000 sheets of paper in stock. -What is the paper's sales value at the splitoff point?

A byproduct has a minimal sales value.